Samsung posts record profits on Galaxy phone sales

Samsung Electronics has reported record profits in the three months to

September, led by strong sales of its Galaxy range of smartphones.

Net profit was 6.5tn won ($5.9bn; 3.7bn), up 91% from a year earlier.

The South Korean phonemaker was also boosted by strong demand at its display

panel unit.

The results come after quarterly profits from Apple - its biggest rival in

phones and tablets - disappointed some investors.

While Samsung has enjoyed tremendous success with its Galaxy range of

smartphones, other manufacturers have been releasing new models, crowding the

marketplace.

Last month, Apple started selling the latest version of its iPhone and this

week, launched a smaller version of the best-selling iPad. On Thursday, it

announced profits in the last quarter were $8.2bn, up from $6.6bn last year.

But not all mobile phone firms are doing well as competition gets more

aggressive.

HTC said on Friday its sales would be lower than had been expected at the end

of the year as the Taiwanese smartphone maker has been finding it hard to

emulate the success of its rivals - with its fourth-quarter revenue down to

about 60bn Taiwanese dollars ($2.1bn; 1.3bn).

It said earlier this month its third-quarter net profit fell 79%, which was

below forecasts.

And South Korea's LG Display returned to profit for the first time in more than

a year as strong demand for the iPhone 5 and tablets increased sales of its

display panels

Records broken

Samsung expects market competition to intensify but "we will do our best to

sustain our earnings momentum throughout the fourth quarter by implementing

strategies we have developed for our businesses", said Robert Yi, head of

investor relations.

The firm said its flagship Galaxy SIII smartphone has been a key driver in

raising profit margins.

"The business environment remained difficult with global economic uncertainties

persisting amid the fiscal concerns in the US and Europe.

"However, we continued to break our quarterly profit records," Mr Yi added.

Start Quote

Samsung's Galaxy Tab tablet PCs are not sexy enough to oversell Apple's iPad

Lee Sun-Tae Analyst

Apple profits miss expectations

HTC sees lower sales at year-end

The display panels unit at the firm had revenues of 8.46tn won, up 19% from the

previous year. The unit is now profitable.

And the firm expects a "flurry of new mobile devices hitting the market" to

boost sales of application processors and image sensors it makes that power

smartphones and tablet PCs.

'Not sexy enough?'

Analysts said that increased competition means that firms may have to lower

their prices to attract buyers as well as spend more on their marketing

campaigns - which will dent their profit margins.

Samsung, which derives the bulk of its earnings from smartphone sales, is

likely to feel the affect of any such moves.

However, increased competition and its legal tussles with Apple have raised

concerns over its future performance.

"There are concerns that Samsung's earnings would peak this year," said Lee

Sun-Tae an analyst at NH Investment & Securities.

"It will take time for Samsung to narrow the gap with Apple in the tablet

market. Samsung's Galaxy Tab tablet PCs are not sexy enough to oversell Apple's

iPad."

Legal tussles

Samsung's success in the smartphone and tablet PC sectors has been accompanied

by legal tussles with its biggest rival, Apple.

The two firms have filed legal cases against each other in more than 10

countries, each accusing the other of violating its patents.

Samsung smart phone Samsung is the world's biggest maker of mobile phones

Earlier this year, a court in the US ruled that Samsung had violated some of

Apple's patents and awarded the US firm $1.05bn in damages.

Samsung is appealing against the ruling.

On Wednesday, in a preliminary ruling, a judge at the US International Trade

Commission, which has the power to block import of products into the US, said

that Samsung had infringed four of Apple's intellectual property patents.

Meanwhile, Samsung has tasted some success in countries such as the UK and

Netherlands.

Analysts said that while the cases seemed to have had little impact on

Samsung's growth, it has raised concerns about how they may affect it in the

future.

"Uncertainty remains about its patent lawsuits with Apple, which weighs on its

shares," said Eon Nam-Joong, of Consus Asset Management.